Altavair has marketed its second aviation asset-backed securitisation (ABS) deal, ALTDE 2026-1, after its inaugural ABS deal last year.
The $667 million deal contains one subordinate B tranche – similar to the Castlelake’s recently marketed CLAS 2026-2 ABS deal. Altavair’s inaugural $582.88 million ABS deal last year also included A and B tranches.
The notes are expected to be fully repaid a repayment tenure of seven years after close in April 2033. The legal final maturity date is April 2051.
The $578 million A tranche has a loan to value (LTV) of 74%. The notes are expected to be rated A by KBRA and Fitch.
The $89 million B tranche has an LTV of 85.3%. KBRA has not assigned an expected rating on this tranche, while Fitch has given it an anticipated A- rating.
Proceeds from the notes will be used to acquire a portfolio of 23 assets. The portfolio includes eight narrowbodies and eight widebodies, as well as five engines and two freighters. The assets are on lease to 16 lessees across 13 jurisdictions.
The deal includes a large amount of widebodies – nearly half of the portfolio’s value – while narrowbodies make up 30.4% of the portfolio.
“Exposure to widebody aircraft is generally viewed as a credit negative, particularly in light of the reduction in international travel stemming from COVID-19,” said KBRA in its report.
However, the widebodies in this portfolio are on lease to airlines that are current on rental payments and have KBRA noted the airlines “exhibit stronger credit characteristics compared to the average airline”.
The widebodies lessees include LATAM, Air France, Ethiopian, EVA Airways, Iberia, and Alaska.
The engines and freighters make up 15.8% and 4.4% of the portfolio’s value, respectively.
After excluding the engine assets, the weighted average age of the portfolio is 10.5 years and the weighted average remaining term of the initial lease contracts is around five years.
Eight of the 23 aircraft are unowned, with Altavair executing purchase agreements that are expected to close into the transaction.
The widebodies include two Boeing 787-9s and one 787-8, two 777-300ERs, as well as one Airbus A330-200 and two A330-300.
Narrowbodies include three Boeing 737 MAX 8s, two 737-800s, and three Airbus A320-200s. The five engines include three GE90-115Bs and two Genx-2B67s. The portfolio’s two freighters are the A321-200P2F aircraft.
The deal includes a $4.3 million security deposit that will be funded at closing. A liquidity facility is also included in the structure, which is sized to nine-months of interest due on the A notes.
MUFG acted as lead structuring agent and joint lead bookrunner. Natixis’ New York Branch is the liquidity facility provider and UMB Bank is the trustee.
In January this year, global investment firm KKR increased its ownership stake in Altavair after signing a definitive agreement with the asset management firm. KKR will fund the fund the investment from its balance sheet.